Jetstar this morning announced the transfer of one of its international routes, Perth-Jakarta-Singapore, to Jetstar Asia.
Actually that’s not what it highlighted in a concurrent announcement that its Perth-Bali service would rise from four times weekly to daily from 13 August, but it is the bit that will be noticed among Qantas employees and in Tiger and AirAsia.
Jetstar, Tiger and AirAsia are trans border franchises where the geographical extent of their ambitions is far larger in potential market size than anything that can be achieved in the constrained and comparatively mature Australian market for air travel.
Pacific Blue, which should be considered the low cost arm of Virgin Blue, may not have pan Asia ambitions that go as far as the others, but it has also expanded to Bali and will continue some future flights to leisure destinations in Malaysia and Thailand and has carved itself considerable market share in the nearer Pacific leisure destinations.
In that context, Virgin Blue’s largest shareholder, Richard Branson, has a 20% stake in AirAsia X, the long haul arm of AirAsia which already flies from the Gold Coast, Melbourne and Perth and is widely expected to apply for Sydney capacity to Kuala Lumpur (with connections to Europe) in the near term.
Today’s announcement is yet another signal that Jetstar will allocate resources across its quadruple franchise, of Jetstar Asia, Jetstar Australia, Jetstar New Zealand and Vietnam based Jetstar Pacific as the opportunities arise.
By funding the capacity increase to Bali from redeploying Jetstar Asia capacity the Qantas LCC subsidiary is also showing its hand in the coming confrontation with Tiger in particular on major domestic routes like Melbourne-Sydney.
This touches a raw nerve in some Qantas people. They see it as more evidence of Jetstar eating into the Qantas domestic and international networks at the cost of their working conditions.
They are of course right, but may also need to ask if there is any real prospect of Qantas not pursuing the Jetstarisation of Qantas conditions to keep its costs closer to those of Virgin Blue.
What Jetstar also foreshadows with this move is a willingness to use under utilised capacity across the franchise to allow rapid responses in the pitched battle with Tiger that is anticipated in the second half of this year.
Subject to regulatory approval Tiger could also swing capacity from some of its lack lustre Asia routes into Australia.
We could take this further. If Jetstar really needs to grow its Sydney frequencies rapidly, and try to lessen defections to Virgin Blue by its frequent flyers in preference to having to fly Jetstar, it will open several Jetstar gates in the main Sydney domestic terminal to take up the slack caused by declining Qantas patronage rather than cram more flights into T2.
This would work better for those using Qantas valet parking and the Qantas Club lounge. Just a thought…..
